RealPage vs. Berkeley: The Battle Over Rental Algorithms

In the ongoing saga of RealPage's legal battles, the Texas-based real estate software company has filed a federal lawsuit against Berkeley, California, over a new ordinance that restricts the use of algorithms in setting rental prices. The lawsuit, filed on April 3, 2025, alleges that the ordinance violates RealPage's free speech rights and is the result of an "intentional campaign of misinformation and often-repeated false claims" about its products.

The ordinance, which goes into effect this month, fines violators up to $1,000 per infraction and claims that algorithmic rental software has contributed to "double-digit rent increases ... higher vacancy rates and higher rates of eviction." RealPage, however, denies these claims, arguing that the real driver of high rents is a lack of housing supply.

The lawsuit comes at a time when RealPage is already facing legal challenges from the Department of Justice (DOJ) and other entities. In August 2024, the DOJ sued RealPage under former President Joe Biden, alleging that its algorithm combines confidential information from each real estate management company in ways that enable landlords to align prices and avoid competition. This, according to the DOJ, amounts to cartel-like illegal price collusion.

The DOJ's lawsuit pointed to RealPage executives' own words about how their product maximizes prices for landlords. One executive said, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” This evidence could be used to support the DOJ's case and potentially lead to substantial financial penalties for RealPage.

RealPage's clients include huge landlords who collectively oversee millions of units across the U.S. If the DOJ's case is successful, these clients may choose to discontinue their use of RealPage's services due to the negative publicity and potential legal risks associated with the company. This could result in a significant loss of revenue for RealPage.

The lawsuit against Berkeley is just the latest in a series of legal challenges facing RealPage. San Francisco, Philadelphia, and Minneapolis have since passed ordinances restricting landlords from using rental algorithms. The DOJ case remains ongoing, as do lawsuits against RealPage brought by tenants and the attorneys general of Arizona and Washington, D.C.

RealPage's attorney, Stephen Weissman, told reporters on a conference call that "Berkeley is trying to enact an ordinance that prohibits speech — speech in the form of advice and recommendations from RealPage to its customers." The company argues that its pricing recommendations — higher, lower or no change — align with whatever property-specific objectives the housing providers want to achieve using the software.

The lawsuit accuses the American Economic Liberties Project (AELP), an advocacy group that opposes monopolistic practices, of spreading falsehoods that have caused local officials to pursue misguided policies. "AELP’s false narrative has taken root in certain municipalities that are particularly eager to find a scapegoat for their own hand in impeding the housing supply," the lawsuit said.

Weissman said RealPage officials were never given an opportunity to present their arguments to the Berkeley City Council before the ordinance was passed and said the company is considering legal action against other cities that have passed similar policies, including San Francisco.

A spokesperson for Berkeley City Council did not comment on the lawsuit and said officials had not been formally served with the complaint. A spokesperson for the AELP did not immediately reply to a request for comment.

The outcome of RealPage's lawsuit against Berkeley could have significant implications for the broader regulatory landscape for rental algorithms in other cities and states. If RealPage wins this argument, it could set a precedent for other companies facing similar restrictions. Conversely, if Berkeley wins, it could embolden other cities to enact similar restrictions.

The lawsuit also highlights the ongoing debate about the role of algorithms in driving up rental prices. RealPage denies providing "price fixing software" or a "coordinated pricing algorithm," arguing that its recommendations are based on property-specific objectives. However, critics like the AELP argue that these algorithms contribute to higher rents and evictions.

The outcome of the lawsuit could shape public perception and policy discussions around the use of algorithms in the rental market. It could also influence legislative action at the state and federal levels. For example, congressional Democrats reintroduced a bill in February 2025 that would require companies to disclose the use of algorithms when setting rental prices.

In summary, the outcome of RealPage's lawsuit against Berkeley could have far-reaching effects on the regulatory landscape for rental algorithms. It could set legal precedents, influence policy decisions in other cities, and shape public and legislative debates about the role of algorithms in the rental market.